Pessimistic Optimist

Pessimistic Optimist
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  • "Gorilla in the room," indeed. From TCW are the ridiculous supply/demand dynamics of the MBS market thanks to the Fed's planned $480B/year in purchases. Maybe it really is time for the mortgage REITs to deleverage and take a vacation[View news story]
    I am still long ARR..only ARR at this point. after .01 in dividend drop I still enjoy the 14+ % dividend.

    I still take profits monthly and DRIP in. The 9 cents is holding and as the price of stock drops, I will purchase from it at a cheaper price. I sold half my folio much higher, re-adjusted my stop and if it hits I will sell off again.

    It has been said and I will repeat for those who seem to forget, or panic and sell everything off.

    "nobody ever lost a dime by taking profit!"

    It works for those who sell all or half, and these folks should not be harangued for their decisions. Its their dough, their comfort level and their emotions.

    Please don't go down the capital gains tax road.. I use the IRA for these mREITs. I do not believe this run is over, however I am protecting my gains just the same. I like sleeping at night and stop outs allow me that piece of mind.
    Oct 25, 2012. 05:22 PM | Likes Like |Link to Comment
  • Armour Residential: How It Manages To Pay A 16% Yield And The Risks Of Investing In It  [View article]
    you are on the right path. The interest rates started dropping therefore the prices of homes rose precipitously. Lenders figured they could offer rates low enough to compensate for higher priced houses. Real estate agents figured since the rates at which the lenders could and did offer, they could increase the price of the average house 300% in some cases.
    Soon lenders realized that housing was jumping well beyond what they were capable of keeping up with and thought their only salvation was to lend more and hope to somehow catch up. So as each new loan was written, lenders were digging themselves deeper into a hole. Eventually deep enough, walls started coming in on them and there was no hope to recover.

    It is somewhat even more simplified with welfare. A woman who is on welfare has a child. For this omission, she gets say 600.00 per month. She doesn't look at the baby costing 735.00 per month to provide for, she just knows there is money in it for her. She realizes she is behing the financial power curve so she has another child to offset the difference. Sure, she now can provide for that 1st child but now she is 270.00 down with the 2nd child.
    The comparison is thinking by the more loans ( babies) created, you can eventually dig yourself out. It does not work that way and thus the collapse of housing market and eventually banking ( daddy warbucks) There are metrics involved that I didn't include, but that is the jest of the bubble bursting.

    Now with rates so low.. and with what banks/lenders remain in the business, they are apprehensive about loans to the point that qualifiying is nails tough. Plus the flood of houses on the market is so slight that it remains a sellers market....they could literally name their price and then have a bid war...but that is slowly changing, and if the gov't opens up housing to the market.. it will become a formidable buyers market.

    Disclaimer: I did not get paid by anybody to write this .. my opinion comes from listening, watching, being a part of and in closing, understanding how it affects owning these REITs.

    Long ARR
    Sep 9, 2012. 04:36 PM | Likes Like |Link to Comment
  • Armour Residential: How It Manages To Pay A 16% Yield And The Risks Of Investing In It  [View article]
    I recently read an article here that had as a hedge against FED action owning CYS along with ARR. The way it was explained, as interest rises, it works into ARR's strategy and as it falls...which can't be too much farther before it goes negative interest... it works into CYS's strategy.

    In essence, by owning the two you protected yourself against any action the FED took? I also just read an article which stated that for the FED to take action and raise rates, its not illegal. Of course not but implied action of keeping rates low and actually doing it are two different things obviously. I am thinking, trust the FED or trust in the management of the REITs?

    I will take the management teams. They know what can happen if rates increase, or fall further. I am confidant they have run these scenarios. FED will do what they feel they need to do, management teams will act accordingly. For now, we all can enjoy the capital appreciation through DRIP anyway.

    Thank you for a well written ,well thought out explanation of the workings of this and other mREITs. It does make it easier to understand. And I agree, this should be REIT 101 for anybody coming in the door.

    Like others here, I am retired.. since I will not receive a SS income ( gov't pension) I am working hard...sort of... to enhance my retirement income stream down the road 10 plus years.

    thanks again Patricia
    Sep 8, 2012. 01:27 PM | 2 Likes Like |Link to Comment
  • Annaly: Who Needs QE3 When We Have ZIRP?  [View article]
    Good Job Lucas!
    I complemented RS on his propensity to stay on top of Fed speak.....( when I don't comprehend everything I hear, I come here and get a better understanding) and I now commend you on such a fine delivery of how these REITs total lay terms. Like I said and I see there are a few others who echo the same sentiment.. the FED is a game changer.. I just have this lack of trust with them. I need to clarify for RS.. I am not a fast gun, or quick shot. maybe a better way to describe it.. analogetticaly ( new word) my fingers are kissing the ivory handles... thats it :) again thanks for great break down/definition/analogy.

    I want to add. In 08 when I was learning how to stumble through the markets, I went into margin. My platform came knocking.. I had to pay margin fees and then losses compounded. it was the absolute ugliest time we have seen in the markets and I had to learn it. There was no teacher..other than Scott trade knocking on the door! My bad for sure. I have stayed in the green from then on. At that time, I only lost 1/3 of my folio.. I was able to rip 2/3 of the folio out of the jaws of the devil! It wasn't much money but I learned about margin in the worse of ways. Yes, it was terrible.. a real tough lesson but it could have been so much worse. So margin and I don't party in the same environment any longer.

    still long ARR..
    Sep 1, 2012. 07:39 PM | 1 Like Like |Link to Comment
  • Annaly: Who Needs QE3 When We Have ZIRP?  [View article]
    After reading excerpts of his speech and hearing some of those on TV, I am not holding my breath as fervently as I was. It does not mean I am walking around exhaling deeply yet. I, like you want to believe what Ben just suggested will hold true....... however... ( you were waiting for that) I still have my hand on my gun (trigger) and am ready to bear leather at the first sign of a significant rise in rates.

    It does not mean I will pull it all, but I will start a downsizing process. As many here who follow the space, I will rely on my DD, assessing and then re-evaluating through-out the events upcoming, whatever they may be.

    At current writing, I do not put alot of trust in gov't and if Ben keeps true to his word my own monetary easing may follow suit. A more direct definition is they still have all the rules and can make more as they go along. I do not use the word hope when discussing stocks.. or especially REITs. But for the context of this writing, I do hope Ben proves me wrong. This malaise, as it were, would be a real positive for the space for as long a duration as needs be. I feel sooner than later markets are going to move up, housing will once again begin an upward trudge and our day in the sun will become somewhat dimmer...but until that day happens and that is not today, I will continue to make hay while the sun shines.

    Thanks for the article and thanks for staying on top of the speech. Cooler heads and patient participants will prevail.

    Long ARR..( for the present time)
    Aug 31, 2012. 04:47 PM | 1 Like Like |Link to Comment
  • American Capital Agency's President Bought $655,000 In Shares This Week  [View article]
    Happy.. basically you stated what I said up the page.. his move is an attempt to manipulate the shareholders.. a ruse.. oh he is buying.. he knows something.. we better buy.

    I owned before he did that.. the dirty little secret will be selling before he does. kain will make his money with buying or shorting.. I would love to see him on our side of the table. I would love to see him lose, like so many of the emotional investors have. But then again, being an emotional investor in this space, hummm... I won't say you deserve to lose.. but you shouldn't be here.

    This isn't for the feign of heart...period.

    "All human actions have one or more of these seven causes: chance, nature, compulsions, habit, reason, passion, desire."
    Aug 16, 2012. 02:41 PM | Likes Like |Link to Comment
  • Great Dividend Payer Two Harbors Is Diversifying Its Business  [View article]
    gators.. I am under the impression TWO will be its own management company.. keep it on the inside.. avoid a middle man. This is just a piece of diversity within their own folio. The housing market is not bottomed yet.. geographically.. its closer, but its not done.

    When that does happen, I want to be in this stock. That is why I am there now. They will pay me to wait. They pay a healthy dividend, the have the ability to grow the share as they manage their own metrics, and when it turns their advantage, back up the truck.

    This doesn't mean I will fall asleep at my post, in fact just the opposite. So many waiting for failure.. I will hold out. assess and evaluate.. act (not react) accordingly.
    Aug 15, 2012. 12:23 AM | 1 Like Like |Link to Comment
  • Great Dividend Payer Two Harbors Is Diversifying Its Business  [View article]
    This must happen more often than I am aware of. Another eye opener. These folks are squatters? Where do they get their power source? I know we are of topic.. I just don't get it.. so in saying that.. I am a bit surprised,,, now back to the topic.. Long TWO
    Aug 14, 2012. 07:38 PM | 1 Like Like |Link to Comment
  • Great Dividend Payer Two Harbors Is Diversifying Its Business  [View article]
    Hilltown, you are spot on.. RISK.. This whole space is Risk adverse. less risk is the preferreds but we are not having conversations about them.

    I have a rental, screening is imperative and I would be hard pressed to not think any company wouldn't do this much more in depth than I. Again, I believe that is the key to securing properties. I know it happens but geze.. it seems like this would be the exception, not the far as total destruction is concerned.

    At any rate, they are smart, they know what potential they have whether it is positive or negative. Mentioning the pitfalls of these companies has its place. It feeds the concern of shareholders. I will believe that the management teams that run these companies also know what they are up against. It seems we "ALL" take risk whether its management or shareholders.

    I am not a doomsday-er, or a naysayer.. and I will not rest on the laurels of past performance in managerial skills..i.e. ARR...

    for the record, I do not believe in the Mayan calendar or the end of the world either.. that started almost 5 years back! I am positive, and I remain long TWO, ARR, MTGE and AGNC
    Aug 14, 2012. 01:14 PM | 2 Likes Like |Link to Comment
  • Great Dividend Payer Two Harbors Is Diversifying Its Business  [View article]
    Nobody ever said this was going to be a cakewalk. Pompano frog.. like Tx frog?? Is so.. my hats is off to you.. and thank you!!

    Anyway, I agree when rates go up and of course yield flatten.. well its a new game then.. and it will not happen over night.. these things are risky.. all of them.. how could they not with their yields?

    Preaching to choir here but with DD , which is paramount under these REITs, we make $$ while it is favorable to us and then we leave. I am of the belief that we have no control as individuals to change the course of any of these... but a management team will.

    Therein lies a portion of my homework.. keep a tight eye on what they are saying and even more on what they are doing. Eventually these REITs will begin a downward spiral as interest begins to correct itself.

    I gotta say, this is one small piece of my macro folio. I am diversified.. even hedged , if you will. That is another key.. be diversified.

    One last thought, many are betting the farm that there will be a certain % of REITs in the spaced that will fail and there may. I am more positive than that. They.. all these managers, CFOs and the like.. know that there is headwind upon them/us, they know what they must do and I believe that they are getting it done. There are obstacles in the future. Interest being one of them. Its the nature of interest rates and the market.

    Do you.. (anybody who reads these responses) really believe they want to fail and are doing nothing in the event interest returns more robustly than perceived? I don't want to believe these companies will fall on the own sword, concede the day and capitulate.

    As I have said in previous articles regarding TWO, they are diversifying themselves to possibly protect the company and the shareholders. What would bolster shareholder confidence more than any REIT protecting vested interests in company and shareholders?

    They have guaranteed paper, and non-agency risk as well. Now they add physical real estate? I am not going to count them out. yes, its aggresive and yes they are adding more risk. They .. as we ( hopefully) are diversified. Until I see time for a change, I am long TWO.

    Gal 87.. yes insider buying. As with all in the space, it would not have the correct effect if it was for the purpose of attempting to bolster confidence through the guise of a ruse. These REITs are transparent and open to public viewing. More DD will be done on said topic.

    thanks all for a healthy conversation.. and of course more food for thought.

    Long MTGE, ARR, AGNC and TWO
    Aug 13, 2012. 11:56 PM | Likes Like |Link to Comment
  • American Capital Agency's President Bought $655,000 In Shares This Week  [View article]
    If Mr. Kain can keep the dividend fairly stable and continue to grow the share-price.. with an occasional correction for SPOs and ex-d ,
    I don't really care if he purchases the lower east side of Manhattan.

    I .. like most, or even all the share holders in the space are here to capture dividends as a priority and take share price as a secondary. As Kain continues to manage this for me, I am with him.

    It is only when these REITs begin to run that I stand my post a little more upright... tighten my bootstraps and become much more aware of my surroundings.

    Snow, live well and prosper here.
    Aug 13, 2012. 01:39 PM | Likes Like |Link to Comment
  • Great Dividend Payer Two Harbors Is Diversifying Its Business  [View article]
    I read the 10 on this also. I too was concerned with buying actual real estate properties. Defaulting being a major concern yet. Their strategy of basically covering all the avenues does make sense. From loans to the physical properties, I believe they are hedging and I also believe this has the potential of a win win, if they can manage it to their own benefit.

    You were very forthright on your observations giving positives and then concerns/apprehensions moving forward. I share those exact sentiments. I am long the REIT and will remain long with DD as my guide. As long as folks get an accurate reading on both sides, whioch between the 10 and articles as this, their own evaluation process should be an easier process. Weigh the risk, assess it towards their own goals and if this is a company they can foreseeably see remaining positive in the future, buy it on the cheap.

    I pulled the trigger at a discounted price and will enjoy the ride for as long as I see the company taking an aggressive stance to keep share price crawling up and dividend stable.... meaning not take more than a 5 basis point dive.

    I am not worried if the dividend retraces 10%..or even 15% to hold the share price, or even grow it. Good companies are taking stock right now, and adjusting where they need to to protect their company and keep their share holders well fed.

    I am looking forward to witnessing and being a part of their current strategy to further gage and negotiate these headwinds.They have their own assessing and evaluating to do. I believe they will be successful and I back that up as being a shareholder.

    Thank you for a a well thought out article.

    Long ....TWO, AGNC, MTGE and ARR.
    Aug 13, 2012. 01:07 PM | 2 Likes Like |Link to Comment
  • The Numbers On The Latest Armour Residential REIT Public Offering.  [View article]
    Do a little homework on TWO. Their strategy seems to be in line with the metrics of the rates a little better than some others. I know TJ is in the process of doing an article on TWO, if he hasn't already. I believe that they are well diversified and regardless of rates, they will come through this. Not completely unscathed, but a little less for wear.

    I read their 10 a few times. I pulled trigger on decent sized buy in. I will assess closely and manage accordingly as I have done with others. Not concerned with a tight trailer on this presently, however if it ramps up.. I will become a little more conservative with upward momentum.

    I wish you the best.. as maybe by now you know I think luck is a less used term and DD is more of a way to negotiate through this space.

    Martin, I believe we owe it to ourselves to prepare as best we can for whatever these REITs do going forward. AGNC is pricey, I agree. But under 34 is not a bad grab especially knowing resistance is over 8% away.
    Aug 12, 2012. 12:23 AM | 1 Like Like |Link to Comment
  • American Capital Agency's President Bought $655,000 In Shares This Week  [View article]
    I didn't know that Jonk.. thanks for that note. It is a shame that this type of action isn't mentioned as the face of the company. Sometimes, I don't catch the finer points of what a company is doing. I see a breaking news segment in the corner of the pc.. I need to start reading that more often.
    thanks again..I store it as FYI..
    Aug 10, 2012. 01:48 PM | Likes Like |Link to Comment
  • American Capital Agency's President Bought $655,000 In Shares This Week  [View article]
    There are times I think that when anyone within the company makes a purchase as this, he is trying to bolster consumer / share holder confidence. Knowing secondary offerings dilute which raises questions at times, and then ex-d drops share price as compensation for payouts, I feel with insider buying investors raise a brow. In most cases investors look at this as if it is a good thing.

    The feeling is: if the CIO / President is buying more, he must know something we don't. Or he is just that confidant in his company. That in itself raises confidence in share holders. On the other hand maybe it is just a ruse?? Maybe he is doing a head fake (literally) as there are folks who get so mentally overwhelmed they live and breath the moves of management.

    Either way, it is a chance to move the share price. and either way, if it moves up, we all gain. Thank you for info.
    Aug 10, 2012. 01:16 PM | Likes Like |Link to Comment